Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Coffee in China

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Executive Summary

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PROSPECTS

Category records modest retail volume and current value growth following a flat performance in 2016

Coffee in China recorded modest retail volume and current value growth in 2017 following a flat performance the previous year and more robust growth rates earlier in the review period. This performance can be largely attributed to instant coffee, which accounts for the vast majority of sales.

Growing coffee culture fuels sales of fresh coffee in both the retail and foodservice channels

While instant coffee posted a fairly sluggish performance in 2017, fresh coffee recorded strong double-digit gains in both current value and volume terms, fuelled by rising consumer demand for freshly brewed coffee due to its better taste and aroma. The growing coffee culture in the country, which is being supported by a booming number of specialist coffee shops such as Starbucks, is also giving rise to a trend towards more consumers trying to brew their own coffee at home, hence fuelling retail sales.

With increasing consumer sophistication and rising household incomes, more consumers of fresh coffee are trading up to fresh ground coffee pods, mainly in pursuit of convenience but without sacrificing taste. Albeit from a very low base, fresh ground coffee pods registered a significant rise in current value sales in 2017, with this being the second strongest performance seen in non-alcoholic beverages, behind only carbonated natural mineral bottled water.

COMPETITIVE LANDSCAPE

Nestlé (China) continues to dominate the category

Nestlé (China) continued to dominate the coffee category in 2017 thanks to a strong product portfolio ranging from instant coffee to fresh coffee and coffee pods. The company further strengthened its leading position, primarily thanks to its dominance in the booming fresh ground coffee pods category.

Illycaffè Shanghai registers the strongest value sales growth

The strong value sales growth achieved by Illycaffè Shanghai in 2017 can be largely attributed to its sole presence in fresh coffee, the fastest growing category, unlike Nestlé, which is also present in instant coffee. Illycaffè, with its focus on Italian-style coffee, offers fresh coffee beans, fresh ground coffee, coffee pods and capsules in addition to coffee makers.

Multinational players maintain the upper hand

Multinational players continued to have the upper hand in coffee in 2017, with the category’s leading five players all originating from foreign countries, ranging from Western Europe to Southeast Asia. Chinese consumers trust foreign brands as coffee is not a traditional hot beverage in China.

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